This issue introduces a new methodology for compiling the established house price index.

Since late last year the ABS has been working on improving the established house price index. Broadly, the improvements are:

to change the pricing point of the series from date of final settlement to date of exchange of contracts;

to improve the methodology to minimise the ‘quality’ effect by using more detailed regional stratification to control for compositional change in the houses priced;

to incorporate mortgage lenders' loan approvals data to produce 'leading indicator' terms for the most recent two quarters;

to introduce series for quarterly median prices of established house transfers (unstratified) for each capital city (new table 7); and

to introduce series for quarterly numbers of established house transfers for each capital city (new table 8).

Refer to Information Paper: Renovating the Established House Price Index (cat. no. 6417.0) released on 30 November 2005, for a more detailed discussion of the improvements.

The new established house price index commences from March quarter 2002 and has a reference base of 2003-04 = 100.0.

Re-referencing the house price indexes

The established house price index is now on a reference base of 2003-04 = 100.0, and the index for construction industry total hourly rates of pay is already on this base. The ABS has decided to re-reference the other indexes presented in the publication to the same base year. Details about the re-referencing process and how to convert the rebased quarterly series of index numbers back to the previous reference base of 1989-90 = 100.0 are included in an appendix to this issue. A consequence of re-referencing price indexes can be that period-to-period percentage changes calculated using re-referenced index number series may differ slightly from those calculated using the original series. These differences do not constitute a revision of the index but simply reflect the effect of rounding.

Re-weighting the project home price index

A new weighting pattern has been introduced to combine the capital city indexes to the weighted average of eight capital cities for the project home price index from September quarter 2005. For more details, see paragraphs 20-21 of the Explanatory Notes. The index series for periods prior to September quarter 2005 are not affected by this re-weighting.

INQUIRIES

For further information about these and related statistics, contact Merry Branson on Canberra (02) 6252 6006 or the National Information and Referral Service on 1300 135 070.